nikieeAsian Stocks Decline as Credit Risk Climbs; Shanghai Shares Jump

Asian stocks fell, paring this week’s advance, after an unexpected drop in U.S. jobless claims fueled speculation the Federal Reserve will cut stimulus. Bond risk rose, Shanghai shares surged and copper led gains among industrial metals.

The MSCI Asia Pacific Index dropped 0.4 percent at 12:36 p.m. in Tokyo, paring a weekly advance to 0.3 percent. Standard & Poor’s 500 Index (SPX) futures added 0.2 percent. China’s Shanghai Composite rallied 3.2 percent and the stock exchange said it is looking into a spike in the index. Credit risk in Japan rose the most in almost seven weeks. Copper and zinc rallied at least 1.1 percent. The New Zealand Exchange halted all trading after an earthquake near Wellington.

Japanese shares dropped after officials including Chief Cabinet Secretary Yoshihide Suga said yesterday that Prime Minister Shinzo Abe hasn’t given instructions on lowering the corporate tax rate. U.S. housing starts and consumer confidence data today may stoke speculation the Fed will trim stimulus next month, concerns fanned by an unexpected drop in U.S. jobless claims to a six-year low.

“The market seems to be suggesting it’s pretty convinced there will be tapering next month,” said Chris Green, an Auckland-based strategist at First NZ Capital Ltd., a brokerage and wealth-management firm. “The market needs to digest the idea in part that tapering is a fundamentally good sign as it comes with the backdrop of an improving U.S. economy.”

Nissan, ANZ

Japan’s Topix Index fell 1.3 percent and Australia’s S&P/ASX 200 Index slid 0.7 percent. India’s SGX CNX Nifty Index futures dropped 0.5 percent. The Nikkei newspaper reported on Aug. 13 that Abe had called for study on cutting the levy on businesses as a counterweight to raising the sales tax, citing unidentified people in the government. The Topix rallied 2 percent that day.

Honda Motor Co. dropped 1.3 percent. Australia & New Zealand Banking Group Ltd. (ANZ) sank 3 percent after Australia’s third-largest bank by market value forecast interest margins will keep dropping. Hyundai Merchant Marine Co. soared 9.1 percent in Seoul after North Korea and South Korea agreed to reopen the jointly operated Gaeseong industrial complex.

South Korea’s Kospi Index lost 0.1 percent after being closed for a holiday yesterday. The gauge headed for a 2.2 percent gain in the week.

Hong Kong’s Hang Seng Index rose 0.3 percent. A report today will show the city’s economic growth accelerated in the second quarter, according to economists surveyed by Bloomberg.

Shanghai’s stock exchange is looking into a spike in the Shanghai Composite Index, says technical services official at the bourse, who declined to be identified because of its rules. The exchange has received calls about the spike and is looking into it, the person said.

Bond Risk

The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region rose, according to credit-default swap traders. The Markit iTraxx Japan index increased 4 basis points to 96, Citigroup Inc. prices show. The gauge is poised for its biggest one-day advance since July 3, according to CMA.

Australian 10-year bond yields climbed four basis points to 3.94 percent after reaching 3.97 percent, the highest July 8. The Bloomberg Global Developed Sovereign Bond Index has fallen 5 percent this year.

The yen fell 0.2 percent to 97.59 per dollar, heading for a 1.4 percent drop in the week. It was steady at 129.99 per euro. Japanese bonds due in 10 years yielded 0.76 percent, up two basis points, or 0.02 percentage point.

Copper for three-month delivery on the London Metal Exchange rose as much as 1.4 percent to $7,410 a metric ton, the highest level since June 5, and nickel added 1.2 percent. Aluminum gained a third day, rising 1 percent.

West Texas Intermediate crude oil added 0.1 percent to $107.43 a barrel, after rising 0.4 percent yesterday. Crude in New York is up 1.4 percent this week.

 

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